Nations other than the U.S. elicit better performance from their students through the use of high-stakes graduation exams. Along these same lines, Michigan now links college scholarships to high school test results. Michigan has rejected the use of minimum-competency exams, largely because it wanted the state's high-school test to reflect more challenging learning goals. Michigan policymakers also did not want to take the risk that a high-stakes exam would lower the rates of high-school graduation and college attendance. Instead, similar to New York and North Carolina, the state took the modest step of reporting students' scores on their high-school transcripts. In 1999, Michigan increased the reward for good academic performance by offering the Michigan Merit Award, a one-year $2,500 scholarship for any student who scores at Level 1 or Level 2 on the Michigan Educational Achievement Program (MEAP) tests in reading, mathematics, science, and writing. What makes the Michigan program so powerful is that the scholarships are based on students' performance on an external exam that reflects the state's recommended curriculum. In this article, the author describes how Michigan's merit-based scholarship program motivates high school students to study harder and improve their academic performance. Benefits of this scholarship program are also discussed. (Contains 1 figure.)